Jamie Stock’s Techdirt Profile

About Jamie Stock

What are Penny Stocks?

1. Penny stock is any stock that sells for less than $5 per stock. They are traded on the OTC Bulletin Board or Pink Sheets. Some also consider them as cheap stocks that are sold on normal securities exchanges, while others think that they can be purchased for less than $1. Small companies issue penny stocks that can trade in low volumes. Read more about Penny Stocks at http://www.pennystockpickalert.com/blog/penny-stocks/

2. Penny stocks are high-risk investments, as many brokerage firms send documents to potential buyers relating the risks of penny stocks. Since penny stocks belong to unproven companies, their stock prices can be very volatile. These smaller companies do not provide enough information about them. Another fact about penny stock is that, their prices are very low; so if there is a decline of 1 cent per share, there is a 10 % fall in the value. However, penny stocks can also offer high potential gains, when the small companies grow to large and turn out to be successful.

Penny Stocks are at risk to Market tampering

3. Penny stock investors ( http://www.pennystockpickalert.com/blog/penny-stock-investment/ ) should be aware of the potential fraud and price inflation in the stock market. The prices of stocks are determined by the demand and supply. For larger stocks with large share volumes, single investor cannot have a great impact on share price. However, a wealthy investor can inflate share prices by buying up shares. The increase in price can spur more buying, at this point of time the wealthy investor makes a large profit, while latecomers lose a large portion of their investment. Due to lack of information, an investor can spread favorable rumors, and exaggerate share prices before a sale.